UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q


            [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended December 31, 2002
                                               -----------------
                        Commission file number 000-25831

                             NetWolves Corporation
             (Exact name of registrant as specified in its charter)

          New York                                           11-2208052
(State or other jurisdiction of                            (I.R.S. Employer
 incorporation or organization)                           Identification No.)


                 4002 Eisenhower Blvd, Tampa, Florida 33634-7511
                    (Address of principal executive offices)

                                 (813) 286-8644
              (Registrant's telephone number, including area code)

                                      None
   (Former name, former address and former fiscal year, if changed since last
                                    report)

Indicate by checkmark  whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                         Yes    X           No
                               ---

Indicate the number of shares  outstanding of each of issuer's classes of common
stock as of the latest practicable date:

                                              NUMBER OF SHARES OUTSTANDING ON
        TITLE OF CLASS                              January 23, 2003
------------------------------                -------------------------------
Common Stock, $.0033 par value                         12,607,119
                                                       ----------
<PAGE>
                     NETWOLVES CORPORATION AND SUBSIDIARIES

                           FORM 10-Q DECEMBER 31, 2002



                                     INDEX


PART I - FINANCIAL INFORMATION


   ITEM 1 - FINANCIAL STATEMENTS

   CONDENSED CONSOLIDATED BALANCE SHEETS
      December 31, 2002 (unaudited) and June 30, 2002                        1-2

   CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
    COMPREHENSIVE LOSS
      For the three and six months ended December 31, 2002 (unaudited)
       and December 31, 2001 (unaudited)                                     3-4

   CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
      For the three and six months ended December 31, 2002 (unaudited)
       and December 31, 2001 (unaudited)                                     5-6

   NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                     7-16

   ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
            CONDITION AND RESULTS OF OPERATIONS                            17-23

   ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK         24

   ITEM 4 - CONTROLS AND PROCEDURES                                           24


PART II - OTHER INFORMATION

   ITEM 1 - LEGAL PROCEEDINGS                                                 25

   ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS                         25

   ITEM 3 - DEFAULTS UPON SENIOR SECURITIES                                   25

   ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS               25

   ITEM 5 - OTHER INFORMATION                                                 25

   ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K                                  26

SIGNATURES                                                                    27

OFFICERS' CERTIFICATIONS                                                   28-29


<PAGE>
                     NETWOLVES CORPORATION AND SUBSIDIARIES

                     CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                        December 31,              June 30,
                                                                            2002                    2002
                                                                        ------------              --------
                                                                        (Unaudited)
ASSETS
<S>                                                                <C>                   <C>
Current assets
     Cash and cash equivalents                                     $        2,207,970    $          656,880
     Restricted cash                                                          295,649               366,276
     Marketable securities, available for sale, at market value                   -                  82,250
     Accounts receivable, net                                               2,078,219               107,178
     Inventories                                                              109,045               136,930
     Prepaid expenses                                                          51,371               129,293
     Purchase deposits                                                            -                 841,000
     Other current assets                                                      31,295                13,491
                                                                   ------------------     -----------------
         Total current assets                                               4,773,549             2,333,298

Property and equipment, net                                                   695,058               682,395

Software, net                                                                 927,766               104,874

Intangible assets, net                                                      2,452,768                45,394

Goodwill                                                                    3,515,698                 -

Other assets                                                                   63,493                58,493
                                                                   ------------------     -----------------
                                                                   $       12,428,332     $       3,224,454
                                                                   ==================     =================




The accompanying notes to the financial statements are an integral part of these
condensed consolidated balance sheets.

                                       1
<PAGE>
                     NETWOLVES CORPORATION AND SUBSIDIARIES

                     CONDENSED CONSOLIDATED BALANCE SHEETS

(continued)
                                                                        December 31,              June 30,
                                                                            2002                    2002
                                                                        ------------              --------
                                                                        (Unaudited)

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
    Accounts payable and accrued expenses                           $        3,657,116    $          675,321
    Accrued losses of discontinued operations                                   94,070               137,958
    Deferred revenue                                                           647,163                46,780
    Due to Norstan, Inc.                                                       179,761                 -
    Advances from related parties                                              500,000                 -
    Current maturities of long-term debt                                     3,970,587               362,982
                                                                    ------------------     -----------------
       Total current liabilities                                             9,048,697             1,223,041

Accrued losses of discontinued operations                                      182,012               235,012
                                                                    ------------------     -----------------
         Total liabilities                                                   9,230,709             1,458,053
                                                                    ------------------     -----------------
Minority interest                                                              271,781               272,533
                                                                    ------------------     -----------------
Commitment and contingencies

Shareholders' equity
    Series A Preferred stock, $.0033 par value; $8,359,620
     liquidation preference; 1,000,000 and no shares authorized on
     December 31, 2002 and June 30, 2002, respectively; 269,462
     and no shares issued and outstanding on December 31, 2002
     and June 30, 2002, respectively                                         3,013,157                   -
    Series B Preferred stock, $.0033 par value; $1,425,794
     liquidation preference; 500,000 and no shares authorized on
     December 31, 2002 and June 30, 2002, respectively; 47,194
     and no shares issued and outstanding on December 31, 2002
     and June 30, 2002, respectively                                           606,707                   -
    Preferred stock, $.0033 par value; 500,000 and 2,000,000
     shares authorized on December 31, 2002 and June 30, 2002,
     respectively; no shares issued and outstanding on December
     31, 2002 and June 30, 2002                                                    -                     -
    Common stock, $.0033 par value; 50,000,000 shares authorized
     on December 31, 2002 and June 30, 2002; 12,607,119 shares
     issued and outstanding on December 31, 2002 and June 30,
     2002                                                                       41,604                41,604
    Additional paid-in capital                                              65,838,525            65,176,647
    Accumulated deficit                                                    (66,574,151)          (63,611,478)
    Accumulated other comprehensive loss                                           -                (112,905)
                                                                    ------------------     -----------------
       Total shareholders' equity                                            2,925,842             1,493,868
                                                                    ------------------     -----------------
                                                                    $       12,428,332     $       3,224,454
                                                                    ==================     =================
</TABLE>
The accompanying notes to the financial statements are an integral part of these
condensed consolidated balance sheets.

                                       2
<PAGE>
                     NETWOLVES CORPORATION AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                             AND COMPREHENSIVE LOSS
                                  (Unaudited)
<TABLE>
<CAPTION>


                                            For the three months ended                For the six months ended
                                                 December 31,                                  December 31,
                                     -----------------------------------------  --------------------------------------


                                             2002                    2001               2002                   2001
                                     -------------------  --------------------  -----------------     ------------------
<S>                                  <C>                  <C>                   <C>                  <C>

 Revenue
     Products                        $         5,127,593  $             62,232  $       9,810,337     $          119,104
     Services                                    132,644               126,002            274,650                256,555
                                     -------------------  --------------------  -----------------     ------------------
                                               5,260,237               188,234         10,084,987                375,659
                                     -------------------  --------------------  -----------------     ------------------
 Cost of revenue
    Products                                   3,416,561                33,055          6,539,135                 77,365
    Services                                      98,225               104,426            191,316                218,134
                                     -------------------  --------------------  -----------------     ------------------
                                               3,514,786               137,481          6,730,451                295,499
                                     -------------------  --------------------  -----------------     ------------------
 Gross profit                                  1,745,451                50,753          3,354,536                 80,160
                                     -------------------  --------------------  -----------------     ------------------
 Operating expenses
    General and administrative                 1,922,479             1,390,734          3,743,847              3,279,612
    Engineering and development                  403,929               427,890            852,903                927,073
    Sales and marketing                          797,238               611,752          1,483,591              1,379,633
                                     -------------------  --------------------  -----------------     ------------------
                                               3,123,646             2,430,376          6,080,341              5,586,318
                                     -------------------  --------------------  -----------------     ------------------

 Loss before other income (expense)           (1,378,195)           (2,379,623)        (2,725,805)            (5,506,158)

 Other income (expense)
    Investment income                              3,790                38,881              5,336                 87,244

    Realized loss on sale of                                                                                         -
      marketable securities                          -                    -              (115,201)                   -
    Minority interest                                523                 2,178                752                  4,591
    Interest expense                                                                     (127,755)              (27,650)
                                                (65,987)              (21,770)
                                     -------------------  --------------------  -----------------     ------------------
 Net loss from continuing operations         (1,439,869)           (2,360,334)         (2,962,673)            (5,441,973)

 Discontinued business
    Loss on disposal of
      discontinued operations                       -                (470,000)               -                 (470,000)
                                     -------------------  --------------------  -----------------     ------------------
 Net loss                                    (1,439,869)           (2,830,334)         (2,962,673)           (5,911,973)

 Other comprehensive income (loss)
      Marketable securities
        valuation adjustment                        -                   4,000                  -                   (500)
                                     -------------------  --------------------  -----------------     ------------------
 Comprehensive loss                  $       (1,439,869)  $        (2,826,334)  $      (2,962,673)    $      (5,912,473)
                                     ==================   ===================   =================     =================


The accompanying notes to the financial statements are an integral part of these
condensed consolidated statements.


                                      3
<PAGE>
                     NETWOLVES CORPORATION AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                             AND COMPREHENSIVE LOSS
                                   (Unaudited)

(continued)
                                            For the three months ended                For the six months ended
                                                 December 31,                                  December 31,
                                     -----------------------------------------  --------------------------------------


                                             2002                    2001               2002                   2001
                                     -------------------  --------------------  -----------------     ------------------
Basic and diluted net loss per share

Net loss                             $       (1,439,869)  $        (2,830,334)  $      (2,962,673)    $      (5,911,973)


    Beneficial conversion on preferred
      stock                                    (35,379)                   -               (35,379)                  -
    Dividends on preferred stock               (85,689)                   -              (142,822)                  -
                                     -------------------  --------------------  -----------------     ------------------
Net loss available to common
     shareholders                    $      (1,560,937)   $        (2,830,334)  $      (3,140,874)    $       (5,911,973)
                                     ===================  ====================  =================     ==================

Basic and diluted net loss per share

    Loss from continuing operations  $           (.12)    $              (.20)  $            (.25)    $             (.50)
    Loss from discontinued operations               -                    (.04)                  -                   (.04)
                                     -------------------  --------------------  -----------------     ------------------
                                     $           (.12)    $              (.25)  $            (.25)    $             (.54)
                                     ===================  ====================  =================     ==================

 Weighted average common shares
    outstanding, basic and diluted         12,607,119              11,520,765          12,607,119             10,979,950
                                     ===================  ====================  =================     ==================
</TABLE>

The accompanying notes to the financial statements are an integral part of these
condensed consolidated statements.

                                       4
<PAGE>
                     NETWOLVES CORPORATION AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                   For the six months ended
                                                                                       December 31,
                                                                         ---------------------------------------

                                                                                  2002                  2001
                                                                         --------------------   ----------------
<S>                                                                       <C>                   <C>

Cash flows from operating activities
     Net loss                                                             $        (2,962,673)  $     (5,911,973)
     Adjustments to reconcile net loss to net cash provided
      by (used in) operating activities
          Depreciation                                                                116,235            121,221
          Amortization                                                                350,231             16,211

          Non-cash charge to operations with respect to
           stock and warrants issued for services and
           amortization of previously issued warrants                                     -            1,583,800
          Minority interest                                                              (752)            (4,591)
          Loss on sale of marketable securities                                       115,201                -
          Amortization of imputed interest                                            127,755                -
          Loss on disposal of property and equipment                                    2,634             80,439

     Changes in operating assets and liabilities
       Restricted cash                                                                 70,627                -
       Accounts receivable                                                           (100,955)            84,620
       Inventories                                                                     27,885             16,659
       Prepaid expenses                                                                77,922            (15,051)
       Other current assets                                                            47,715             79,309
       Accounts payable and accrued expenses                                        1,075,202           (324,304)
       Accrued loss on disposal of discontinued operations                            (96,888)          (337,793)
       Deferred revenue                                                               186,427            (42,498)
       Due to Norstan, Inc.                                                         1,026,235                -
                                                                          -------------------   ----------------
         Net cash provided by (used in) operating activities                           62,801         (4,653,951)
                                                                          -------------------   ----------------
Cash flows from investing activities
     Capitalized software costs                                                           -              (23,159)
     Proceeds from sale of marketable securities                                       79,954                -
     Payment to purchase Norstan Network Services, Inc.                            (3,350,000)               -
     Acquisition costs paid                                                           (84,500)               -
     Patent costs paid                                                                 (1,497)            (4,735)
     (Payments for) refunds of security deposits                                       (5,000)             4,693
     Purchases of property and equipment                                              (75,232)           (75,749)
                                                                          -------------------   ----------------
       Net cash used in investing activities                                      $(3,436,275)          $(98,950)
                                                                          -------------------   ----------------



The accompanying notes to the financial statements are an integral part of these
condensed consolidated statements.

                                       5
<PAGE>

                     NETWOLVES CORPORATION AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

(continued)
                                                                                   For the six months ended
                                                                                        December 31,
                                                                         ---------------------------------------

                                                                                  2002                  2001
                                                                         --------------------   ----------------
Cash flows from financing activities
     Cash proceeds from private sale of preferred stock and
      warrants                                                            $        4,797,072    $            -
     Cash proceeds from private sale of common stock                                     -             6,325,000
     Financing costs paid                                                           (372,508)           (310,000)
     Advances from related parties                                                   600,000                 -
     Repayment of advances                                                          (100,000)                -
                                                                         --------------------   ----------------
       Net cash provided by financing activities                                   4,924,564           6,015,000
                                                                         --------------------   ----------------
Net increase in cash and cash equivalents                                          1,551,090           1,262,099

Cash and cash equivalents, beginning of period                                       656,880           4,411,657
                                                                         --------------------   ----------------
Cash and cash equivalents, end of period                                 $         2,207,970    $      5,673,756
                                                                         ====================   ================


SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING
  AND FINANCING ACTIVITIES

Purchase acquisition (Note 4)
     Accounts receivable, net                                             $        1,870,086    $            -
     Due from Norstan, Inc.                                                          846,474                 -
     Other receivable                                                                 65,519                 -
     Property and equipment                                                           56,300                 -
     Software                                                                        940,000                 -
     Intangibles                                                                   2,639,000                 -
     Goodwill                                                                      3,515,698                 -
     Accounts payable and accrued expenses                                        (1,713,771)                -
     Deferred revenue                                                               (413,956)                -
     Acquisition costs                                                              (575,500)                -
     Payments to Norstan, Inc.                                                    (3,750,000)                -
                                                                         --------------------   ----------------
       Non-interest bearing promissory note                              $          3,479,850   $            -
                                                                         ====================   ================

Dividends on preferred stock (Note 7)                                    $            142,822   $            -
                                                                         ====================   ================

</TABLE>


The accompanying notes to the financial statements are an integral part of these
condensed consolidated statements.

                                       6
<PAGE>
                     NETWOLVES CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

                  SIX MONTHS ENDED DECEMBER 31, 2002 AND 2001


1    Interim financial information

     The summary financial information  contained herein is unaudited;  however,
     in the opinion of management,  all adjustments  (consisting  only of normal
     recurring  accruals)  necessary for a fair  presentation  of such financial
     information have been included.  These financial statements,  including the
     condensed  consolidated  balance sheet as of June 30, 2002, which have been
     derived from audited financial statements, are presented in accordance with
     the  requirements  of  Form  10-Q  and  consequently  may not  include  all
     disclosures  normally required by generally accepted accounting  principles
     or those  normally  made in the Company's  Annual Report on Form 10-K.  The
     accompanying  condensed consolidated financial statements and related notes
     should be read in conjunction with the Company's Annual Report on Form 10-K
     for the fiscal year ended June 30, 2002.  The results of operations for the
     three and six months ended December 31, 2002 are not necessarily indicative
     of the results to be expected for the full year.

2    The Company

     The condensed  consolidated  financial  statements  include the accounts of
     NetWolves   Corporation  and  its  subsidiaries,   NetWolves   Technologies
     Corporation ("NWT"),  Norstan Network Services, Inc. ("NNSI"),  ComputerCOP
     Corporation  ("ComputerCOP")  and its majority  owned TSG Global  Education
     Web, Inc. ("TSG") (collectively "NetWolves" or the "Company").

     NWT designs, develops, assembles and sells Internet infrastructure security
     platforms,  coupled with network  based  management  services,  designed to
     significantly  reduce the up-front and ongoing costs associated with small,
     medium and remote offices' global Internet access.  NNSI provides  multiple
     source data and voice  services  and related  consulting  and  professional
     services   throughout  the  United  States.  TSG  provides  management  and
     consulting services to the automotive industry.  Effective August 31, 2002,
     the Company ceased all operations of ComputerCOP,  terminated all remaining
     employees of ComputerCOP  and subleased a majority of the space  previously
     occupied by ComputerCOP.

3    Significant accounting policies

     Use of estimates

     In preparing condensed consolidated financial statements in conformity with
     accounting  principles generally accepted in the United States,  management
     makes estimates and assumptions  that affect the reported amounts of assets
     and liabilities and disclosures of contingent assets and liabilities at the
     date of the condensed  consolidated  financial  statements,  as well as the
     reported  amounts of revenue  and  expenses  during the  reporting  period.
     Actual results could differ from those estimates.

     Principles of consolidation

     The consolidated  financial  statements include the accounts of the Company
     and  its  subsidiaries.   All  significant  intercompany  transactions  and
     balances have been eliminated in consolidation.  The separate  ownership of
     one  of  the   Company's   subsidiaries   is  reflected  in  the  Company's
     consolidated  financial  statements  as  minority  interest.  The  minority
     interest includes common stock  representing 1.7% of the outstanding shares
     of the subsidiary.

                                       7
<PAGE>
                     NETWOLVES CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

                  SIX MONTHS ENDED DECEMBER 31, 2002 AND 2001


3    Significant accounting policies (continued)

     Inventories

     Inventories  consist of raw materials and finished  goods.  Inventories are
     valued at the lower of cost or net  realizable  value  using the  first-in,
     first-out  method.  Raw material and finished goods amounted to $80,099 and
     $28,946,  respectively,  at December  31, 2002 and  $108,079  and  $28,851,
     respectively, at June 30, 2002.

     Business combinations and goodwill

     In June 2001, the Financial  Accounting Standards Board (the "FASB") issued
     Statement of Financial  Standards  ("SFAS") No. 141, Business  Combinations
     ("SFAS No.  141") and SFAS No. 142,  Goodwill and Other  Intangible  Assets
     ("SFAS No. 142"). SFAS No. 141 addresses financial accounting and reporting
     for business combinations while SFAS No. 142 addresses financial accounting
     and reporting for acquired goodwill and other intangible  assets.  SFAS No.
     141 applies to all  business  combinations  initiated  after June 30, 2001,
     while SFAS No. 142 is  required  to be  applied in fiscal  years  beginning
     after  December 15, 2001.  Identifiable  intangible  assets with other than
     indefinite lives will continue to be amortized in the financial statements,
     however,  goodwill and identifiable intangible assets with indefinite lives
     will no longer be amortized.  In connection  with the  acquisition of NNSI,
     the  adoption  of SFAS No. 141 has had a material  impact on the  Company's
     financial  statements.  The  adoption of SFAS No. 142 has not had  material
     impact on the Company's  financial  statements although the Company will be
     required to review its intangibles and goodwill  annually for indicators of
     impairment  and this  review  could  result in  recognition  of  impairment
     losses.  SFAS No. 142  requires  that the  Company  test all  goodwill  for
     impairment within six months of  implementation.  The Company has performed
     the  required  first  step of  testing  for  impairment  by  utilizing  the
     discounted cash flow method and did not find any impairment of goodwill.

     Basic and diluted net loss per share

     The diluted loss per share does not include the impact of potential  shares
     to be issued upon  exercise of  convertible  preferred  stock,  options and
     warrants aggregating approximately 15.9 Million and 7.3 million at December
     31,  2002 and 2001,  respectively,  because the Company had a net loss from
     operations and, therefore, the effect would be antidilutive.

     Revenue recognition

     NWT records revenue in accordance with Statement of Position 97-2 "Software
     Revenue  Recognition"  ("SOP  97-2"),  issued by the American  Institute of
     Certified  Public  Accountants  (as modified by Statement of Position 98-9)
     and SEC Staff  Accounting  Bulletin No. 101 ("SAB 101")  regarding  revenue
     recognition in financial statements.  SOP 97-2 provides additional guidance
     with respect to multiple  element  arrangements;  returns,  exchanges,  and
     platform transfer rights; resellers;  services; funded software development
     arrangements; and contract accounting.  Accordingly,  revenue from the sale
     of hardware and perpetual and term software  licenses are recognized at the
     time of delivery and  acceptance  of hardware and software  products by the
     customer,  when the fee is fixed and  determinable  and  collectibility  is
     probable. Maintenance or monitoring revenue that is bundled with an initial
     license fee is deferred  and  recognized  ratably over the  maintenance  or
     monitoring period. Amounts deferred for maintenance or monitoring are based
     on the fair value of equivalent  maintenance  or  monitoring  services sold
     separately.

                                       8
<PAGE>
                     NETWOLVES CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

                  SIX MONTHS ENDED DECEMBER 31, 2002 AND 2001



3    Significant accounting policies (continued)

     Revenue recognition (continued)

     Revenues from NNSI generated from the resale of long distance  services are
     recognized as services are provided.  Revenues from NNSI primarily  consist
     of monthly  fees,  which are  recognized  over the monthly  period and long
     distance  charges,  which are  recognized as incurred.  These  revenues are
     included  within  products  in the  condensed  consolidated  statements  of
     operations.

     The Company  recognizes  revenue from consulting and training fees when the
     services are provided.  Shipping and handling costs are included in cost of
     revenue in the accompanying consolidated statements of operations.

     Reclassifications

     Certain  reclassifications  have  been made to the  condensed  consolidated
     financial  statements  shown  for the prior  periods  in order to have them
     conform to the current period's classifications.

     Summary of recent accounting pronouncements

     In December 2002,  the FASB issued SFAS No. 148. This statement  amends the
     transition  and  disclosure  provisions  of SFAS No.  123,  Accounting  for
     Stock-Based  Compensation.   Specifically,   SFAS  No.  148  provides  more
     transition  alternatives  for companies  that wish to adopt the fair- value
     based  provisions of SFAS No. 123 and increases the disclosure  required of
     companies that continue to account for their stock-based compensation under
     the  intrinsic-value  method  prescribed  under APB No. 25,  Accounting for
     Stock Issued to Employees.  The annual disclosure and transition provisions
     of SFAS No. 148 are  effective  for fiscal years ending after  December 15,
     2002 (for us,  effective for 2003 and thereafter).  The interim  disclosure
     provisions are effective for interim  periods  beginning after December 15,
     2002 (for us,  effective  beginning  the third  quarter  of 2003).  We will
     implement the disclosure  provisions of this statement in the third quarter
     of  2003  and do not  anticipate  any  effect  on the  Company's  financial
     statements.

4    Business combination

     On July 9, 2002, the Company acquired all of the outstanding  capital stock
     of NNSI  pursuant  to a Stock  Purchase  Agreement  dated as of January 30,
     2002, as amended,  among Norstan,  Inc. ("Seller") and NNSI, both Minnesota
     corporations,  the Company and  NetWolves  Acquisitions,  Inc.,  a Delaware
     corporation.  NNSI  provides  multiple  source data and voice  services and
     related consulting and professional services throughout the United States.

     The Company paid to the Seller $7,500,000,  $3,750,000 of which was paid in
     cash on or prior to closing and  $3,750,000 is payable under the terms of a
     non-interest  bearing  promissory note due July 9, 2003. The purchase price
     was determined  through arms' length  negotiations.  The $3,750,000 in cash
     paid by the Company to the Seller was primarily obtained through equity and
     debt financing and to a lesser extent from working capital.

                                       9
<PAGE>
                     NETWOLVES CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

                  SIX MONTHS ENDED DECEMBER 31, 2002 AND 2001



4    Business combination (continued)

     The total purchase  price,  including  acquisition  costs, is summarized as
     follows:
<TABLE>
        <S>                                                    <C>
        Cash paid to Norstan, Inc., on or prior to closing     $       3,750,000
        Promissory note payable*                                       3,479,850
        Finders fee                                                      350,000
        Professional fees                                                225,500
                                                               -----------------
                                                               $       7,805,350
                                                               =================
<FN>

          *The non-interest bearing promissory note payable with a face value of
          $3,750,000 was  discounted  using a rate of 7.5% and is due on July 9,
          2003.
</FN>
</TABLE>

     The results of NNSI's  operations  have been  included in our  consolidated
     financial statements commencing July 9, 2002.

     The following  table  summarizes  the  estimated  fair values of the assets
     acquired and liabilities assumed at the July 9, 2002 acquisition date.
<TABLE>
        <S>                                                    <C>
        Current assets                                         $       2,782,079
        Equipment                                                         56,300
        Intangible assets not subject to amortization - licenses         203,000
        Intangible assets subject to amortization (estimated 5
         year useful life)                                             3,376,000
        Goodwill                                                       3,515,698
                                                                ----------------
        Total assets acquired                                          9,933,077
                                                                ----------------
        Current liabilities                                           (2,127,727)
                                                                ----------------
        Total liabilities assumed                                     (2,127,727)
                                                                ----------------
        Net assets acquired                                     $      7,805,350
                                                                ================
</TABLE>

     The fair value of acquired  intangible  assets subject to amortization,  as
     well as their respective estimated useful lives, is as follows:
<TABLE>
<CAPTION>

                                                Estimated
                                               Useful Life          Fair Value
                                               -----------          ----------
        <S>                                     <C>             <C>
        Contractual customer relationships      5 Years         $       2,436,000
        Computer billing software               5 Years                   940,000
                                                                -----------------
        Total intangible assets                                 $       3,376,000
                                                                =================
</TABLE>
     All of the  goodwill  arising  from  this  acquisition  is  expected  to be
     deductible  for  income  tax  purposes  over a period  of 15  years  and is
     included in the Telecommunications segment. Based on intangible assets held
     at December 31, 2002, estimated  amortization of the Company's identifiable
     intangible  assets  will equal  approximately  $675,000 in each of the five
     succeeding  fiscal  years.  Accumulated  amortization  on such  assets  was
     $323,000 at December 31, 2002.

                                       10
<PAGE>
                     NETWOLVES CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

                  SIX MONTHS ENDED DECEMBER 31, 2002 AND 2001


4    Business combination (continued)

     The following  unaudited pro forma financial  information has been prepared
     assuming that the  acquisition  of NNSI had taken place at the beginning of
     the  periods  presented.  The  pro  forma  information  is not  necessarily
     indicative  of the  combined  results  that  would  have  occurred  had the
     acquisition  taken  place  at  the  beginning  those  periods,  nor  is  it
     necessarily  indicative  of the results  that may occur in the future.  The
     quarter ended December 31, 2002 is included in the  accompanying  condensed
     consolidated statements of operations and comprehensive loss.
<TABLE>
<CAPTION>
                                                      For the quarter          For the six months ended
                                                          ended                        December 31,
                                                        December 31,
                                                           2001                  2002                 2001
                                                   -------------------  -------------------  ------------------
         <S>                                       <C>                  <C>                  <C>

         Revenue                                   $         5,526,589  $        10,436,809  $       10,988,943
         Net loss from continuing operations
           available to common shareholders        $       (1,555,970)  $        (3,075,355) $       (3,843,093)
         Basic and diluted net loss per share
           from continuing operations              $             (.14)  $              (.24) $             (.35)
         Net loss available to common
           shareholders (including discontinued
           operations)                             $       (2,025,970)  $        (3,075,355) $       (4,313,093)
         Basic and dluted net loss per share
           (including discontinued operations)     $             (.18)  $              (.24) $             (.39)
</TABLE>



5    Balance sheet components
<TABLE>
<CAPTION>
                                                                             December 31,          June 30,
                                                                                2002                2002
                                                                        -----------------    ----------------
         <S>                                                            <C>                  <C>
         Property and equipment, net
              Machinery and equipment                                   $         879,171    $         755,045
              Furniture and fixtures                                              218,497              218,497
              Leasehold improvements                                              142,353              140,875
                                                                                1,240,021            1,114,417
              Less: accumulated depreciation and amortization                    (544,963)            (432,022)
                                                                        -----------------    -----------------
              Property and equipment, net                               $         695,058    $         682,395
                                                                        =================    =================


                                                                            December 31,          June 30,
                                                                                2002                2002
                                                                        -----------------    -----------------
         Accounts payable and accrued expenses
              Trade accounts payable and other accrued operating
                 expenses                                               $       2,378,044    $         490,311
              Sales, excise and universal services charges payable                319,065                 -
              Compensated absences                                                268,209              182,671
              Provider settlement obligation                                      250,000                 -
              Other liabilities                                                   157,282                1,039
              Bonuses and commissions payable                                     141,694                1,300
              Dividends payable                                                   142,822                 -
                                                                        -----------------    -----------------
                                                                        $       3,657,116    $         675,321
                                                                        =================    =================
</TABLE>

                                       11
<PAGE>
                     NETWOLVES CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

                  SIX MONTHS ENDED DECEMBER 31, 2002 AND 2001


6    Related party transactions

     On July 10, 2002, the Company received advances from four individuals,  one
     of whom is an officer  and  director  of the  Company  and another who is a
     director of the  Company,  aggregating  $600,000,  of which,  $100,000  was
     subsequently repaid to a non-officer/director  of the Company. The advances
     are  non-interest  bearing,  due on demand and have no scheduled  repayment
     terms.

     On November 1, 2002, the Company entered into a consulting agreement with a
     corporation whose majority owner is also a shareholder of the Company,  for
     marketing and new business development opportunities,  as well as strategic
     advisory services.  The agreement  commenced effective November 1, 2002 and
     requires payments of $20,000 per month,  cancelable at the Company's option
     upon 30 days notice.

7    Shareholders' equity

     Preferred stock

     On July 16, 2002 the Company amended its Certificate of  Incorporation,  as
     authorized by its Board of Directors,  by designating  1,000,000  shares of
     its 2,000,000  shares of preferred stock as Series A Convertible  Preferred
     Stock, par value $.0033 per share ("Series A Preferred Stock").

     Cumulative dividends on the Series A Preferred Stock accrue at a rate of 8%
     per annum from the date of issuance through June 30, 2004 and thereafter at
     a rate of 12% per  annum  and will be  payable  annually  at the  Company's
     option in cash or Series A  Preferred  Stock.  Each  share of the  Series A
     Preferred  Stock is  convertible  at the holders'  option into 10 shares of
     common  stock.  Each share of Series A Preferred  Stock will have ten votes
     and will vote as a single class with holders of the Company's common stock.

     Through  December 31, 2002,  the Company has issued  269,465  shares of its
     Series A Preferred Stock for a total cash consideration of $4,041,972.  The
     shares were issued in connection  with a private  offering of the Company's
     securities  pursuant  to  which  shareholders  also  received  warrants  to
     purchase shares of the Company's  common stock at an initial exercise price
     equal to $1.65 per  share.  Five  warrants  were  issued  for each share of
     Series A Preferred  Stock.  The  warrants  have an exercise  price equal to
     $1.65 per share and are exercisable for five years from the issuance date.

     Approximately  $3,000,000  of the  proceeds  from the sale of the  Series A
     Preferred Stock was utilized to purchase the  outstanding  capital stock of
     NNSI (Note 4).

     On October 30, 2002, the Company amended its Certificate of  Incorporation,
     as authorized by its Board of Directors,  by designating  500,000 shares of
     its 2,000,000  shares of preferred stock as Series B Convertible  Preferred
     Stock, par value $.0033 per share ("Series B Preferred Stock").


                                       12

<PAGE>
                     NETWOLVES CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

                  SIX MONTHS ENDED DECEMBER 31, 2002 AND 2001


7    Shareholders' equity (continued)

     Preferred stock (continued)

     Cumulative dividends on the Series B Preferred Stock accrue at a rate of 8%
     per annum from the date of issuance through January 31, 2005 and thereafter
     at a rate of 12% per annum and will be payable  annually  at the  Company's
     option in cash or Series A  Preferred  Stock.  Each  share of the  Series B
     Preferred  Stock is  convertible  at the holders'  option into 20 shares of
     common  stock.  Each share of Series B Preferred  Stock will have ten votes
     and will vote as a single class with holders of the Company's common stock.

     Through  December 31,  2002,  the Company has issued  47,194  shares of its
     Series B Preferred Stock for a total cash  consideration  of $755,100.  For
     the period from January 1, 2003 through  February 12, 2003, the Company has
     issued an  additional  105,763  shares of its Series B Preferred  Stock for
     cash consideration of approximately $1.7 million. The shares were issued in
     connection with a private offering of the Company's  securities pursuant to
     which  shareholders  also  received  warrants  to  purchase  shares  of the
     Company's  common  stock at an initial  exercise  price  equal to $1.25 per
     share.  Five  warrants  were  issued for each  share of Series B  Preferred
     Stock. The warrants have an exercise price equal to $1.25 per share and are
     exercisable  for  five  years  from  the  issuance  date.  Pursuant  to the
     antidilution  provision  of the  Series A  Preferred  Stock,  each share of
     Series A Preferred  Stock is now  convertible  into 18.75  shares of common
     stock.

     Proceeds  from the  issuance  of the  preferred  stock  and  warrants  were
     allocated to preferred  stock and to additional  paid-in capital based upon
     their relative fair value. Additionally, after allocating the proceeds, the
     Company  determined that there was a beneficial  conversion feature for the
     Series A  Preferred  Stock and  Series B  Preferred  Stock,  which has been
     included in the condensed consolidated statements of operations.

     Stock option plan

     In June 2002, the Company's  Board of Directors  authorized the creation of
     the 2002 stock option plan (the "2002 Plan") to grant  non-qualified  stock
     options to employees,  directors and  consultants to purchase up to a total
     of 3,000,000  shares of the Company's  common stock. If any award under the
     2002 Plan terminates,  expires unexercised,  or is canceled,  the shares of
     common stock that would otherwise have been issuable  pursuant thereto will
     be available for issuance  pursuant to the grant of new awards. On December
     20, 2002, the company issued  approximately  815,000  options to employees,
     none of whom were  officers or directors  of the Company,  with an exercise
     price of $1.00 per share and a term of 5 years.


                                       13
<PAGE>
                     NETWOLVES CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

                  SIX MONTHS ENDED DECEMBER 31, 2002 AND 2001




8    Segment information

     The  Company  reports  segments in  accordance  with  Financial  Accounting
     Standards  Board  Statement  No.  131  "Disclosures  about  Segments  of an
     Enterprise  and Related  Information".  The  Company  and its  subsidiaries
     operate in three separate business segments,  the Technology  segment,  the
     Telecommunications segment and the Management and consulting segment. These
     operating segments are representative of the Company's  management approach
     to its  evaluation  of  its  operations.  The  accounting  policies  of the
     reportable  operating  segments  are the  same as  those  described  in the
     summary of significant  accounting policies.  The Technology segment, which
     operates  worldwide,  is  primarily  engaged  in the  design,  development,
     marketing  and  support  of  information  delivery  hardware  products  and
     software.  The  Telecommunications  segment,  which operates  domestically,
     provides multiple source data and voice services and related consulting and
     professional   services.  The  Management  and  consulting  segment,  which
     operates   domestically,   provides   management  and  consulting  services
     primarily to the automotive industry throughout the United States.
<TABLE>
<CAPTION>
                                                    For the three months ended          For the six months ended
                                                           December 31,                        December 31,
                                                 --------------------------------   -------------------------------

                                                       2002              2001              2002             2001
                                                 ---------------  ---------------   --------------   --------------
         <S>                                       <C>               <C>            <C>              <C>

         Revenue
              Technology                           $     133,587     $    110,759   $    240,508     $     218,474
              Telecommunications                       5,046,155                -      9,683,209                 -
              Management and consulting
                                                          80,495           77,475        161,270           157,185
                                                   -------------     ------------   ------------      ------------
                  Total                            $   5,260,237     $    188,234   $ 10,084,987      $    375,659
                                                   =============     ============   ============      ============
         Operating income (loss)
              Technology                           $ (1,576,874)     $ (2,251,971)  $ (3,374,072)     $ (5,237,258)
              Telecommunications                         230,392                -        693,845                 -
              Management and consulting                 (31,713)         (127,652)       (45,578)         (268,900)
                                                   -------------     ------------   ------------      ------------
                  Total                            $ (1,378,195)     $ (2,379,623)  $ (2,725,805)     $ (5,506,158)
                                                   =============     ============   ============      ============
</TABLE>
<TABLE>
<CAPTION>
                                                                             December 31,           June 30,
                                                                                 2002                 2002
                                                                         -----------------   -----------------
             <S>                                                         <C>                 <C>
             Identifiable assets
                 Technology                                              $       1,576,196   $       3,114,692
                 Telecommunications                                             10,794,190               -
                                                                         -----------------   -----------------
                 Management and consulting                                          57,946              45,143
                                                                                12,428,332           3,159,835
                 Net assets of discontinued operations                              -                   64,619
                                                                         -----------------   -----------------
                     Total                                               $      12,428,332   $       3,224,454
                                                                         =================   =================
</TABLE>



                                       14
<PAGE>
                     NETWOLVES CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

                  SIX MONTHS ENDED DECEMBER 31, 2002 AND 2001



8    Segment information (continued)

     The  Company  had  two  major  customers,  both  in the  Telecommunications
     segment,  which  accounted for 32% and 12%,  respectively,  of consolidated
     revenue for the six months ended  December 31, 2002 and one major  customer
     in the Technology  segment which accounted for 35% of consolidated  revenue
     for the six months ended December 31, 2001.  Additionally,  the Company had
     two customers in the Telecommunications  segment that accounted for 14% and
     13% of  consolidated  accounts  receivable  at  December  31, 2002 and four
     customers,  one in the  Technology  segment and three in the Management and
     consulting segment that accounted for 29%, 10%, 13% and 21% of consolidated
     accounts receivable at June 30, 2002.

     The  Company  made  purchases  from two data and  voice  service  providers
     included   within   the   Telecommunications    segment   that   aggregated
     approximately  86% and 13% of the total cost of revenue  for the six months
     ended December 31, 2002.

9    Disposal of business segment

     During June 2001, the Company  formally  adopted a plan to discontinue  its
     ComputerCOP software operations.  At that time, this consisted primarily of
     ComputerCOP software technology,  inventory and property and equipment.  At
     June 30, 2001, the Company accrued a provision for estimated  losses during
     the phase out period of approximately $497,000.  During the year ended June
     30, 2002, the Company recorded additional charges  aggregating  $1,053,275,
     which  primarily  represented  the cost of  salaries  through  an  extended
     disposal date of August 31, 2002,  coupled with an equity  settlement of an
     employment  contract and a revised  estimate of the total  leased  facility
     costs, net of a sublease.

     Effective   August  31,  2002,   the  Company   ceased  all  operations  of
     ComputerCOP,   terminated  all  remaining   employees  of  ComputerCOP  and
     subleased a majority of the space  previously  occupied by ComputerCOP  for
     $5,000 per month for a period of six months. The sublease also provides the
     lessee  use of certain  furniture  and  equipment  during the period of the
     lease.  Accrued  losses of  discontinued  operations  included  within  the
     condensed  consolidated balance sheets at December 31, 2002 represent lease
     payment obligations on the ComputerCOP facility,  net of estimated sublease
     payments, through the remaining term of the lease.

10   Provider liabilities and credits

     During the transition  period of the Company's  newly acquired  subsidiary,
     NNSI, the Company was the target of a theft of telecommunications services.
     The Company is currently working with one of its major providers to resolve
     this issue and currently believes this obligation to approximate  $250,000.
     Accordingly, the Company has accrued such amount and included it in general
     and administrative expenses within the condensed consolidated statements of
     operations.

     As a result of this theft of  telecommunications  services,  management has
     since  enacted new internal  controls at the  subsidiary  level in order to
     deter future  occurrences  of this nature.  It is the opinion of management
     that the outcome of this matter will not have a material  adverse effect on
     our operations or our financial condition taken as a whole.

     Additionally,  in November  2002,  the  Company  was  notified by this same
     provider, of credits of approximately  $195,000 due to the Company from the
     misapplication  of  payments  by the  provider.  The  Company is  currently
     verifying  the validity of these  credits and has not recorded  such amount
     within its  condensed  consolidated  financial  statements at this time.

                                       15
<PAGE>
                     NETWOLVES CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

                  SIX MONTHS ENDED DECEMBER 31, 2002 AND 2001

11   Liquidity

     Historically,  the Company's has  experienced  significant  reoccurring net
     operating  losses as well as  negative  cash  flows  from  operations.  The
     Company's main source of liquidity has been equity  financing which is used
     to fund losses from  operating  activities.  From July 1, 2002 to date, the
     Company has raised,  exclusive of commissions,  approximately  $6.5 million
     from the sale of its preferred stock, of which  approximately  $1.7 million
     was raised subsequent to December 31, 2002. While  approximately $3 million
     of the proceeds was utilized to purchase the  outstanding  capital stock of
     NNSI,  the  remainder  of the  proceeds  has been and will  continue  to be
     utilized to fund ongoing operations as well as provide  substantial payment
     of the $3.75 million note payable due to Norstan, Inc. on July 9, 2002. The
     note is collateralized by the common stock of NNSI.

     The  Company   will   continue   to  utilize   cash   generated   from  its
     Telecommunications segment to fund the operations of its other segments and
     is seeking to raise  additional  monies from the sale of its capital  stock
     and/or  obtain debt  financing  to meet its funding  needs over the next 12
     months.  Additionally,  management has instituted cost saving measures over
     the past 12 months intended to reduce its overhead expenses,  most notably,
     a reduction of staffing within its Technology  segment and its discontinued
     ComputerCOP  operations,  aggregating  approximately $2.5 million in annual
     salaries and related benefits.

     Currently,  the Company does not have sufficient  capital resources to fund
     operations for a period of 12 months from the filing of this current report
     and there can be no  assurance  that the  Company  will  obtain  sufficient
     capital  to  finance  its  operations.  If the  Company  is unable to raise
     sufficient  funding  to  sustain  its  operations,   it  will  curtail  the
     operations of certain business segments.  However, even if the Company does
     raise sufficient operating capital, there can be no assurances that the net
     proceeds will be sufficient to enable it to develop its business to a level
     where it will generate profits and cash flows from  operations.  Due to the
     factors  listed  above,  these matters  raise  substantial  doubt about the
     Company's ability to continue as a going concern, as noted in the report of
     independent  certified public accountants dated October 9, 2002,  contained
     in the  Company's  Form 10-K for the fiscal year ended June 30,  2002.  The
     accompanying  consolidated  financial  statements  have been  prepared on a
     going concern  basis,  which  contemplates  the  realization  of assets and
     satisfaction of liabilities in the normal course of business. The financial
     statements do not include any adjustments relating to the recoverability of
     the recorded assets or the  classification of the liabilities that might be
     necessary should the Company be unable to continue as a going concern.

                                       16
<PAGE>


ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

     Forward-Looking Statements

     This Form 10-Q includes, without limitation,  certain statements containing
     the words "believes." "anticipates", "estimates", "expects", and words of a
     similar nature, constitute "forward-looking  statements" within the meaning
     of the Private Securities  Litigation Reform Act of 1995. This Act provides
     a "safe harbor" for  forward-looking  statements to encourage  companies to
     provide  prospective  information about themselves so long as they identify
     these  statements  as forward  looking and provide  meaningful,  cautionary
     statements identifying important factors that could cause actual results to
     differ from the projected results.  All statements other than statements of
     historical fact made in this Form 10-Q are forward-looking.  In particular,
     the statements  herein regarding  industry  prospects and future results of
     operations  or  financial   position  are  forward-   looking   statements.
     Forward-looking  statements reflect  management's  current expectations and
     are  inherently   uncertain.   The  Company's  actual  results  may  differ
     significantly  from  management's  expectations  based on certain risks and
     uncertainties,  including  the risk  factors  referenced  in the  Company's
     filings with the Securities and Exchange Commission.  Readers are cautioned
     not to place  undue  reliance  on  these  forward-looking  statements.  The
     company does not undertake any obligation to release publicly any revisions
     to  these   forward-looking   statements   to  reflect   future  events  or
     circumstances or to reflect the occurrence of unanticipated events.

     Overview

     NetWolves  Corporation  ("NetWolves" or the "Company")  designs,  develops,
     assembles and sells Internet  infrastructure  security  platforms,  coupled
     with network based management  services,  designed to significantly  reduce
     the up-front and ongoing  costs  associated  with small,  medium and remote
     offices'  global  Internet   access.   NetWolves'   patent  pending  system
     technology  enables  organizations  to obtain their short,  middle and long
     term IT and e-business  initiatives  through the deployment of our plug 'n'
     play perimeter  office  security  platform,  coupled with our secure remote
     monitoring  and  management  ("SRM2 TM") system.  Additionally,  NetWolves'
     advanced,  centralized,  reporting  module offers the ability for corporate
     executives to view,  via the Internet,  both  statistical  and  performance
     based metrics for their global network.

     NetWolves   products  and  services  offer  complete  system  solutions  to
     organizations  needing cost effective network security (firewall,  routing,
     intrusion  detection,   content  filtering,  email,  intranet,  FTP,  etc.)
     complete with advanced integrated hardware, a user-friendly  interface, and
     Internet-  based  expansion  capabilities.  As  companies  migrate from the
     traditional  private leased lines  (dedicated  point to point data or voice
     circuts) to public network connectivity to reduce costs, NetWolves provides
     cost-effective,  value-added expansion technologies such as virtual private
     networking  ("VPN"), a process used to allow secure data transmissions on a
     local area network,  a wide area  network,  or to secure  wireless  network
     connections.  This feature  affords the user  virtually all the benefits of
     lease-line service without the attendant recurring costs.

     NetWolves  differentiates itself from its competitors primarily through its
     proprietary patent pending  technology,  which provides  centralized remote
     monitoring and management  facilities.  While other,  more  labor-intensive
     management  systems  currently  exist,  such  systems  require  an  inbound
     administrative  port to provide  remote  monitoring  and  management.  Most
     Fortune  1000  companies  are  unwilling  to take the risk of opening up an
     inbound  administrative  port while  having their  entire  enterprise  on a
     public broadband medium.  "Hackers",  using simple port scanning tools, can
     easily locate these  administrative  inbound ports. SRM2 TM has the ability
     to  monitor  thousands  of  locations   concurrently   without  opening  an
     administrative  inbound port and allows the secure,  remote  management and
     monitoring of multiple  all-in-one gateway servers located worldwide.  This
     monitoring  can be  performed  in  real-time  from one or numerous  central
     sites.  This  technology  also allows a network  administrator  to create a
     configuration  template with all necessary  information changes required to

                                       17
<PAGE>

     manage  all-in-one  units.  This template can be applied to each unit via a
     secure  configuration  mechanism  from  the  central  monitoring  location,
     without compromising network security. It is this SRM2 TM system that forms
     the basis of the Company's agreement with the General Electric Company.

     Acquisition of Norstan Network Services, Inc.

     On July 9, 2002, the Company acquired all of the outstanding  capital stock
     of Norstan Network Services,  Inc. ("NNSI"). The Company paid to the Seller
     $7,500,000, $3,750,000 of which was paid in cash on or prior to closing and
     $3,750,000 is payable under the term of a non-interest  bearing  promissory
     note due July 9, 2003.

     NNSI provides  multiple source data and voice services to approximately 400
     customers  throughout  the United  States.  NNSI's  products  include voice
     services  consisting  of  switched  and  dedicated   inbound/outbound  long
     distance,  travel cards,  conference  calling and local services,  and data
     services  consisting  of IP  dedicated  and  dial  up  services,  broadband
     services, frame relay and private line.

     NNSI's selling methodology  includes completing a thorough needs assessment
     to understand the current  infrastructure  and future  requirements  of the
     prospective  customer.  Upon completion of the  assessment,  NNSI designs a
     custom, unique and flexible solution utilizing  multi-carrier  alternatives
     under one contract,  one invoice and support structure.  Its account teams,
     strategic industry  relationships and consolidated  information and billing
     platform allow NNSI to deliver a single source solution  utilizing the best
     of what is  available  to solve the  customer's  communication  and network
     needs.

     As a result  of the  acquisition,  the  Company  expects  to  increase  its
     security  solution  revenues  within its  Technology  segment by leveraging
     NNSI's  existing  customer  base.  In  addition,  the  Company  expects the
     acquisition will enable it to expand the range of services it can offer its
     existing customers as well as future customers.

     Agreement with General Electric

     On September 26, 2002, the Company entered into a three year agreement with
     General  Electric  Consumer  Finance,  the  consumer  financing  arm of the
     General  Electric  Company.  The agreement  covers the use of the Company's
     technology  by General  Electric  Consumer  Finance  in all of its  offices
     worldwide, encompassing 36 countries. The Company has commenced the rollout
     of its products initially within Germany and Japan.


                                       18

<PAGE>

     Results of Operations

     The Company currently operates in three business  segments,  the technology
     segment      ("Technology"),       the      telecommunications      segment
     ("Telecommunications")   and  the   management   and   consulting   segment
     ("Management  and  Consulting").  During June 2001,  the  Company  formally
     adopted  a  plan  to  discontinue  its  ComputerCOP   software  operations,
     eliminating the Computer Software  segment.  Effective August 31, 2002, the
     Company  ceased all  operations of  ComputerCOP,  terminated  all remaining
     employees of ComputerCOP  and subleased a majority of the space  previously
     occupied by ComputerCOP.

     Six months ended December 31, 2002 and 2001

          Revenue

     Revenue from  continuing  operations  increased to $10,084,987  for the six
     months ended December 31, 2002, compared to $375,659 for the same period in
     the prior year.  The  increase in revenue was  primarily  the result of the
     inclusion of the results of Norstan Network Services, Inc., commencing July
     9, 2002, which resulted in revenue from the  Telecommunications  segment of
     $9,683,209.  Revenues  from the Company's  Technology  and  Management  and
     Consulting  segments  did not  experience  significant  change  for the six
     months  ended  December  31, 2002  compared to the same period in the prior
     year.  The Company  anticipates a significant  increase in revenue from its
     Technology segment due to the rollout of its products in fulfillment of the
     Company's  September 2002 contract with General Electric  Consumer Finance,
     including  its current  rollout in Germany and Japan.  The Company does not
     anticipate  any  material  change  in  revenues  from  its  Management  and
     Consulting segment in this fiscal year.

          Cost of revenue and gross profit

     Cost of revenue in connection with the Telecommunications  segment includes
     costs of multiple source data and voice service providers.  Cost of revenue
     in connection with the Technology segment include costs associated with the
     sale  of  the  Company's   Internet   products  and  services  and  include
     manufacturing,  packaging and shipping  costs,  amortization of capitalized
     software costs, and warranty  expenses.  Cost of revenue in connection with
     the  Management  and  Consulting   segment   include  direct   expenses  of
     consultants utilized in the generation of management and consulting revenue
     and software  licensing costs.  Cost of revenue increased to $6,730,451 for
     the six months ended  December 31, 2002,  compared to $295,499 for the same
     period in the prior year. The increase in cost of revenue was primarily the
     result of the inclusion of the results of Norstan Network  Services,  Inc.,
     commencing  July 9,  2002,  which  resulted  in cost of  revenue  from  the
     Telecommunications  segment  of  $6,465,113.  Cost of  revenue  within  the
     Technology  segment decreased to $134,997 compared to $154,299 for the same
     period in the prior year.  This  decrease  was  primarily  the result of an
     aggregate  reduction of inventory  obsolescence  for the period of $20,062.
     Cost of revenue within the Management and Consulting  segment  decreased to
     $130,341  compared to $141,200 for the same period in the prior year.  This
     decrease  was  primarily  the  result of the  consolidation  of  consulting
     services,  which resulted in the  termination  of one such  consultant at a
     savings of $11,975 for the current period.

     Overall gross profit was at 33% for the six months ended December 31, 2002,
     compared  to 21% for the same  period in the prior  year.  The  increase in
     gross profit was  primarily  the result of the  inclusion of the results of
     Norstan Network Services,  Inc., commencing July 9, 2002, which resulted in
     gross profit from the Telecommunications segment of 33%.



                                    19
<PAGE>


          General and administrative

     General and  administrative  expenses  consist  primarily  of salaries  and
     related  expenses for executive,  finance,  facilities and human  resources
     personnel,   recruiting   expenses  and  professional   fees.  General  and
     administrative  expenses  increased to $3,743,847  for the six months ended
     December 31, 2002,  compared to $3,279,612 for the same period in the prior
     year. The increase was primarily the result of the inclusion of the results
     of Norstan  Network  Services,  Inc.,  totaling  $1,608,573  for the period
     commencing  July 9, 2002  through  December 31,  2002.  This was  partially
     offset by a reduction of costs  related to a settlement  expense and equity
     compensation of consultants of $487,500 and $626,300,  respectively, in the
     prior period,  compared to no such amounts in the current period. We expect
     general and  administrative  costs to  increase in absolute  dollars in the
     future.

          Engineering and development

     Engineering  and  development  expenses,  which are  expensed as  incurred,
     consist  primarily of salaries and related expenses for personnel  utilized
     in  designing,  maintaining  and enhancing our products as well as material
     costs for test units and prototypes.  Costs associated with the development
     of  software   products  are  generally   capitalized  once   technological
     feasibility is reached.  Engineering and development  expenses decreased to
     $852,903 for the six months ended  December 31, 2002,  compared to $927,073
     for the same period in the prior year.  The  decrease  in  engineering  and
     development  costs was  primarily  the  result of a  limited  reduction  of
     engineering and development personnel,  which resulted in reduced salary of
     $30,923  for the  current  period.  We  expect  to  incur  engineering  and
     development  costs in the future as we continue to  maintain  our  existing
     product line as well as develop new products and features,  as evidenced by
     the  development of our intelligent  Failover and continued  development of
     our SRM2 TM technology.

        Sales and marketing

     Sales and marketing expenses consist primarily of salaries, commissions and
     related  expenses for personnel  engaged in  marketing,  sales and customer
     support   functions,   as  well  as  costs  associated  with  trade  shows,
     promotional  activities,   advertising  and  public  relations.  Sales  and
     marketing  expenses  increased  to  $1,483,591  for  the six  months  ended
     December 31, 2002,  compared to $1,379,633 for the same period in the prior
     year. The increase in sales and marketing expenses was primarily the result
     of the inclusion of the results of Norstan Network Services, Inc., totaling
     $915,678 for the period  commencing July 9, 2002 through December 31, 2002.
     This was partially  offset a reduction in the number of sales  personnel in
     the Company's  Technology  segment  totaling  $493,675.  Additionally,  the
     Company has been  changing  its  marketing  efforts to focus  primarily  on
     direct sales to Fortune 1000 customers.  The Company intends to continue to
     aggressively  promote  its  current  and future  products  and,  therefore,
     expects  sales and marketing  costs to increase in absolute  dollars in the
     future.

        Other income (expenses)

     Other income (expenses)  consists primarily of realized gains and losses on
     marketable securities, interest expense and investment portfolio income and
     decreased  to  $(236,868)  for the six  months  ended  December  31,  2002,
     compared to $64,185 for the same period in the prior year. The decrease was
     primarily  due to an increase in  interest  expense on the note  payable to
     Norstan,  Inc. of $127,755 and a loss on the sale of marketable  securities
     of $115,201.

                                       20
<PAGE>

     Three months ended December 31, 2002 and 2001

        Revenue

     Revenue from  continuing  operations  increased to $5,260,237 for the three
     months ended December 31, 2002, compared to $188,234 for the same period in
     the prior year.  The  increase in revenue was  primarily  the result of the
     inclusion of the results of Norstan Network Services,  Inc. for the period,
     which   resulted  in  revenue  from  the   Telecommunications   segment  of
     $5,046,155.  Revenues  from the Company's  Technology  and  Management  and
     Consulting  segments did not  experience  significant  change for the three
     months  ended  December  31, 2002  compared to the same period in the prior
     year.  The Company  anticipates a significant  increase in revenue from its
     Technology segment due to the rollout of its products in fulfillment of the
     Company's  September 2002 contract with General Electric  Consumer Finance.
     The Company does not anticipate any significant change in revenues from its
     Management and Consulting segment in the near term.

        Cost of revenue and gross profit

     Cost of revenue increased to $3,514,786 for the three months ended December
     31, 2002,  compared to $137,481 for the same period in the prior year.  The
     increase in cost of revenue was  primarily  the result of the  inclusion of
     the  results  of Norstan  Network  Services,  Inc.  for the  period,  which
     resulted  in  cost  of  revenue  from  the  Telecommunications  segment  of
     $3,359,345.  Cost of revenue from the Company's  Technology  and Management
     and Consulting segments did not experience significant change for the three
     months  ended  December  31, 2002  compared to the same period in the prior
     year

     Overall  gross profit was at 33% for the three  months  ended  December 31,
     2002,  compared to 27% for the same period in the prior year.  The increase
     in gross profit was primarily the result of the inclusion of the results of
     Norstan  Network  Services,  Inc. for the period,  which  resulted in gross
     profit from the Telecommunications segment of 33%.

        General and administrative

     General and  administrative  expenses increased to $1,922,479 for the three
     months ended December 31, 2002,  compared to $1,390,735 for the same period
     in the prior year.  The increase was  primarily the result of the inclusion
     of the results of Norstan Network Services, Inc., totaling $956,106 for the
     period. This was partially offset by a reduction of costs related to equity
     compensation of consultants of $338,000,  in the prior period,  compared to
     no such amounts in the current period. We expect general and administrative
     costs to increase in absolute dollars in the future.

        Engineering and development

     Engineering  and development  expenses  decreased to $403,929 for the three
     months ended December 31, 2002, compared to $427,890 for the same period in
     the prior year.  The  decrease in  engineering  and  development  costs was
     primarily the result of a limited  reduction of engineering and development
     personnel,  which  resulted  in reduced  salary of $14,084  for the current
     period.  We expect to incur engineering and development costs in the future
     as we continue to maintain our existing product line as well as develop new
     products and features,  as evidenced by the  development of our intelligent
     Failover and continued development of our SRM2 TM technology.

                                       21
<PAGE>

        Sales and marketing

     Sales and  marketing  expenses  increased  to $797,238 for the three months
     ended  December 31,  2002,  compared to $611,752 for the same period in the
     prior year. The increase in sales and marketing  expenses was primarily the
     result of the inclusion of the results of Norstan Network  Services,  Inc.,
     totaling  $500,312 for the period  commencing July 9, 2002 through December
     31,  2002.  This was  partially  offset a reduction  in the number of sales
     personnel  in  the  Company's   Technology   segment   totaling   $161,882.
     Additionally,  the Company has been changing its marketing efforts to focus
     primarily on direct sales to Fortune 1000 customers. The Company intends to
     continue to  aggressively  promote its  current  and future  products  and,
     therefore,  expects  sales and  marketing  costs to  increase  in  absolute
     dollars in the future.

        Other income (expenses)

     Other income  (expenses)  decreased to $(61,674) for the three months ended
     December  31,  2002,  compared  to $19,289 for the same period in the prior
     year. The decrease was primarily due to an increase in interest  expense on
     the note payable to Norstan, Inc. of $65,987 for the current period.

     Liquidity and Capital Resources

     Our  operating  activities  provided  cash of $.06  million  during the six
     months ended  December 31, 2002,  as compared to using $4.6 million for the
     same period in the prior year.  Cash  provided  by  operations  for the six
     months ended December 31, 2002 was primarily attributable to an increase in
     accounts  payable and accrued  expenses and  collection  of amounts owed by
     Norstan,  Inc. of $1.1 million and $1.0  million,  respectively,  partially
     offset  by a net  loss of  $3.0  million,  exclusive  of  non-cash  charges
     aggregating  $.7 million.  Cash used for the six months ended  December 31,
     2001 was primarily  attributable  to a net loss of $5.9 million,  partially
     offset by non-cash equity compensation totaling $1.6 million.

     Our investing  activities  used cash of $3.4 million  during the six months
     ended December 31, 2002, as compared to $1.0 million for the same period in
     the prior year. Cash used in investing  activities for the six months ended
     December 31, 2002 was primarily  attributable to a payment of $3.4 million,
     exclusive of  acquisition  costs paid of $.07 million,  to acquire  Norstan
     Network Services, Inc. Cash used in investing activities for the six months
     ended  December  31,  2001  was  primarily  attributable  to the  Company's
     purchases of property and equipment totaling $.08 million.

     Our  financing  activities  provided  cash of $4.9  million  during the six
     months  ended  December 31,  2002,  as compared to  providing  cash of $6.0
     million  during  the same  period  in the  prior  year.  Cash  provided  by
     financing  activities for the six months ended December 31, 2002 was due to
     the private sale of the Company's preferred stock and warrants and advances
     from  four  individuals,  one of whom is an  officer  and  director  of the
     Company  and another who is a director  of the  Company.  Cash  provided by
     financing  activities for the six months ended December 31, 2001 was due to
     the private sale of the Company's common stock.

     Following  is a listing  of the  Company's  contractual  obligations  as of
     December 31, 2002:
<TABLE>
<CAPTION>
                                                               Payments Due by Period
   ---------------------------- -------------------------------------------------------------------------------------
   Contractual Obligations           Total         Less than 1       1-3 years        4-5 years       After 5 years
                                                      year
   ---------------------------- ---------------- ---------------- ---------------- ----------------- ----------------
   <S>                          <C>              <C>              <C>              <C>               <C>

   Long Term Debt               $   3,970,000    $   3,970,000    $            -   $            -    $            -
   ============================ ================ ================ ================ ================= ================
   Operating Leases             $   1,890,781    $      713,006   $      600,121   $      577,654    $            -
   ============================ ================ ================ ================ ================= ================
   Total Contractual Cash       $   5,860,781    $   4,683,006    $      600,121   $      577,654    $            -
       Obligations
   ---------------------------- ---------------- ---------------- ---------------- ----------------- ----------------
</TABLE>

                                       22
<PAGE>

     During the transition  period of the Company's  newly acquired  subsidiary,
     NNSI, the Company was the target of a theft of telecommunications services.
     The Company is currently working with one of its major providers to resolve
     this issue and currently believes this obligation to approximate  $250,000.
     Accordingly, the Company has accrued such amount and included it in general
     and administrative expenses within the condensed consolidated statements of
     operations.

     In  November  2002,  the Company was  notified  by this same  provider,  of
     credits  of   approximately   $195,000   due  to  the   Company   from  the
     misapplication  of  payments  by the  provider.  The  Company is  currently
     verifying  the validity of these  credits and has not recorded  such amount
     within its condensed consolidated financial statements at this time.

     Management's plan

     Historically,  the Company's has  experienced  significant  reoccurring net
     operating  losses as well as  negative  cash  flows  from  operations.  The
     Company's main source of liquidity has been equity  financing which is used
     to fund losses from  operating  activities.  From July 1, 2002 to date, the
     Company has raised,  exclusive of commissions,  approximately  $6.5 million
     from the sale of its preferred stock, of which  approximately  $1.7 million
     was raised subsequent to December 31, 2002. While  approximately $3 million
     of the proceeds was utilized to purchase the  outstanding  capital stock of
     NNSI,  the  remainder  of the  proceeds  has been and will  continue  to be
     utilized to fund ongoing operations as well as provide  substantial payment
     of the $3.75 million note payable due to Norstan, Inc. on July 9, 2002. The
     note is collateralized by the common stock of NNSI.

     The  Company   will   continue   to  utilize   cash   generated   from  its
     Telecommunications segment to fund the operations of its other segments and
     is seeking to raise  additional  monies from the sale of its capital  stock
     and /or obtain debt  financing  to meet its funding  needs over the next 12
     months.  Additionally,  management has instituted cost saving measures over
     the past 12 months intended to reduce its overhead expenses,  most notably,
     a reduction of staffing within its Technology  segment and its discontinued
     ComputerCOP  operations,  aggregating  approximately $2.5 million in annual
     salaries and related benefits.  The Company  anticipates that negative cash
     flow from  operations  will  average  less than  $200,000 per month for the
     quarter ended March 31, 2003.

     Currently,  the Company does not have sufficient  capital resources to fund
     operations for a period of 12 months from the filing of this current report
     and there can be no  assurance  that the  Company  will  obtain  sufficient
     capital  to  finance  its  operations.  If the  Company  is unable to raise
     sufficient  funding  to  sustain  its  operations,   it  will  curtail  the
     operations of certain business segments.  However, even if the Company does
     raise sufficient operating capital, there can be no assurances that the net
     proceeds will be sufficient to enable it to develop its business to a level
     where it will generate profits and cash flows from  operations.  Due to the
     factors  listed  above,  these matters  raise  substantial  doubt about the
     Company's ability to continue as a going concern, as noted in the report of
     independent  certified public accountants dated October 9, 2002,  contained
     in the  Company's  Form 10-K for the fiscal year ended June 30,  2002.  The
     accompanying  consolidated  financial  statements  have been  prepared on a
     going concern  basis,  which  contemplates  the  realization  of assets and
     satisfaction of liabilities in the normal course of business. The financial
     statements do not include any adjustments relating to the recoverability of
     the recorded assets or the  classification of the liabilities that might be
     necessary should the Company be unable to continue as a going concern.

                                       23
<PAGE>




ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        Not applicable.


ITEM 4  CONTROLS AND PROCEDURES

     Within  90  days  prior  to the  filing  date  of this  report,  under  the
     supervision of our Chief Executive Officer and Chief Financial Officer,  we
     evaluated  our  disclosure  controls  and  procedures  (as defined in rules
     13a-14(c) and 15d-14(c) under the Securities  Exchange Act of 1934).  Based
     on that evaluation, our Chief Executive Officer and Chief Financial Officer
     concluded that our disclosure  controls and procedures  were  sufficient to
     provide reasonable assurances that the information required to be disclosed
     by us in the reports that we file or submit under the  Securities  Exchange
     Act of 1934 is recorded, processed, summarized and reported within the time
     periods  specified in the  Securities and Exchange  Commission's  rules and
     forms.

     During the transition  period of the Company's  newly acquired  subsidiary,
     NNSI, the Company was the target of a theft of telecommunications services.
     The Company is currently working with one of its major providers to resolve
     this issue and currently believes this obligation to approximate  $250,000.
     Accordingly, the Company has accrued such amount and included it in general
     and administrative expenses within the condensed consolidated statements of
     operations.

     As a result of this theft of  telecommunications  services,  management has
     since  enacted new internal  controls at the  subsidiary  level in order to
     deter future  occurrences  of this nature.  It is the opinion of management
     that the outcome of this matter will not have a material  adverse effect on
     our operations or our financial condition taken as a whole.

     Other than the event listed above,  there have been no significant  changes
     in our  internal  controls  or in other  factors  that could  significantly
     affect those  internal  controls  subsequent to the date of our  evaluation
     thereof.


                                       24
<PAGE>


PART II - OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS

None


ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

     For the quarter  ended  December  31,  2002,  the Company has issued  7,000
     shares of its Series A Preferred  Stock for a total cash  consideration  of
     $105,000.  Cumulative dividends on the Series A Preferred Stock accrue at a
     rate of 8% per annum from the date of  issuance  through  June 30, 2004 and
     thereafter  at a rate of 12% per annum and will be payable  annually at the
     Company's option in cash or Series A Preferred Stock.  Each share of Series
     A Preferred  Stock will have ten votes and will vote as a single class with
     holders of the Company's common stock. The shares were issued in connection
     with a private  offering  of the  Company's  securities  pursuant  to which
     shareholders  also  received  warrants to purchase  shares of the Company's
     common stock at an initial  exercise  price equal to $1.65 per share.  Five
     warrants  were  issued  for each  share of Series A  Preferred  Stock.  The
     proceeds are to be used for working capital purposes.

     Additionally,  for the quarter  ended  December 31,  2002,  the Company has
     issued  47,194  shares of its  Series B  Preferred  Stock for a total  cash
     consideration of $755,100.  Cumulative  dividends on the Series B Preferred
     Stock  accrue at a rate of 8% per annum from the date of  issuance  through
     January  31,  2005 and  thereafter  at a rate of 12% per  annum and will be
     payable  annually  at the  Company's  option in cash or Series B  Preferred
     Stock.  Each share of the Series B Preferred  Stock is  convertible  at the
     holders'  option  into 20 shares of common  stock.  Each  share of Series B
     Preferred  Stock  will have ten votes and will vote as a single  class with
     holders of the Company's common stock. The shares were issued in connection
     with a private  offering  of the  Company's  securities  pursuant  to which
     shareholders  also  received  warrants to purchase  shares of the Company's
     common stock at an initial  exercise  price equal to $1.25 per share.  Five
     warrants  were  issued  for each  share of Series A  Preferred  Stock.  The
     proceeds are to be used for working capital purposes.


ITEM 3. DEFAULTS UPON SENIOR SECURITIES

        Not applicable.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        Not applicable.


ITEM 5. OTHER INFORMATION

        Not applicable.

                                       25
<PAGE>

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

          (a) Exhibits
          ------------

     99.1 Certification of Walter M.  Groteke  pursuant  to  Section  906 of the
          Sarbanes-Oxley Act of 2002.

     99.2 Certification of  Peter  C.  Castle  pursuant  to  Section  906 of the
          Sarbanes-Oxley Act of 2002.

          (b) Reports on Form 8-K
          -----------------------

          Current report on Form 8-K dated July 16, 2002.

          Current report on Form 8-K dated January 8, 2003.


                                       26
<PAGE>


                                   SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
     Registrant  has duly  caused  this report to be signed on its behalf by the
     undersigned thereunto duly authorized.




                                BY:     NETWOLVES CORPORATION





                                        /s/ Walter M. Groteke
                                        -----------------------------------
                                        Walter M. Groteke
                                        Chairman of the Board and President




                                        /s/ Peter C. Castle
                                        -----------------------------------
                                        Peter C. Castle
                                        Secretary and Treasurer
                                        Principal Financial Officer and
                                        Principal Accounting Officer








Date: February 14, 2003

                                       27
<PAGE>


                             OFFICER CERTIFICATIONS

I, Walter M. Groteke, certify that:

     1. I have  reviewed  this  quarterly  report  on  Form  10-Q  of  NetWolves
Corporation;

     2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

     3. Based on my knowledge,  the financial  statements,  and other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

     4. The  registrant's  other  certifying  officers and I are responsible for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others  within those  entities,  particularly  during the
period in which this quarterly report is being prepared;

     b) evaluated the effectiveness of the registrant's  disclosure controls and
procedures  as of a date  within  90  days  prior  to the  filing  date  of this
quarterly report (the "Evaluation Date"); and

     c)  presented  in  this  quarterly   report  our   conclusions   about  the
effectiveness of the disclosure  controls and procedures based on our evaluation
as of the Evaluation Date;

     5. The registrant's other certifying  officers and I have disclosed,  based
on our most  recent  evaluation,  to the  registrant's  auditors  and the  audit
committee  of  registrant's  board  of  directors  (or  persons  performing  the
equivalent function):

     a) all  significant  deficiencies  in the design or  operation  of internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and have  identified  for the
registrant's auditors any material weaknesses in internal controls; and

     b) any fraud,  whether or not material,  that involves  management or other
employees who have a significant role in the registrant's internal controls; and

     6. The registrant's other certifying  officers and I have indicated in this
quarterly  report  whether or not there  were  significant  changes in  internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.


Date: February 14, 2003



                                /s/ Walter M. Groteke
                                ------------------------------------------
                                Walter M. Groteke
                                Chairman of the Board, President and Chief
                                Executive Officer



                                       28
<PAGE>

                             OFFICER CERTIFICATIONS

I, Peter C. Castle, certify that:

     1. I have  reviewed  this  quarterly  report  on  Form  10-Q  of  NetWolves
Corporation;

     2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

     3. Based on my knowledge,  the financial  statements,  and other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

     4. The  registrant's  other  certifying  officers and I are responsible for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others  within those  entities,  particularly  during the
period in which this quarterly report is being prepared;

     b) evaluated the effectiveness of the registrant's  disclosure controls and
procedures  as of a date  within  90  days  prior  to the  filing  date  of this
quarterly report (the "Evaluation Date"); and

     c)  presented  in  this  quarterly   report  our   conclusions   about  the
effectiveness of the disclosure  controls and procedures based on our evaluation
as of the Evaluation Date;

     5. The registrant's other certifying  officers and I have disclosed,  based
on our most  recent  evaluation,  to the  registrant's  auditors  and the  audit
committee  of  registrant's  board  of  directors  (or  persons  performing  the
equivalent function):

     a) all  significant  deficiencies  in the design or  operation  of internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and have  identified  for the
registrant's auditors any material weaknesses in internal controls; and

     b) any fraud,  whether or not material,  that involves  management or other
employees who have a significant role in the registrant's internal controls; and

     6. The registrant's other certifying  officers and I have indicated in this
quarterly  report  whether or not there  were  significant  changes in  internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.


Date: February 14, 2003



                                /s/ Peter C. Castle
                                -----------------------------------------
                                Peter C. Castle
                                Secretary and Treasurer
                                Principal Financial Officer and Principal
                                Accounting Officer

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